SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report For The Period
Ended March 31, 2002
Commission File No. 001-31669
TARI, INC.
(Name of small business issuer in its charter)
Nevada
(State or other jurisdiction of Incorporation or Organization)
98-0339-560
(I.R.S. Employer Identification Number)
9 Langton Close Woking, Surrey, England
Phone: (011) 44 1483 850 329
(Address, including zip code and telephone number, including area code, of
registrant's executive offices)
Securities registered under Section 12(b) of
the Exchange Act:
none
Securities registered under Section 12(g) of
the Exchange Act:
Common Stock
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days: Yes
__X__ No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of December 31, 2002 was 2,500,000 common shares.
1
PART ITEM 1. FINANCIAL STATEMENTS.
The un-audited financial statements for the three-month period ended June
30, 2002 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update forward
looking statements.
History And Organization
Tari, Inc. (the "Company") was recently incorporated
under the laws of the state of Nevada on May 2, 2001. We have not commenced
business operations and we are considered a pre-exploration stage enterprise. To
date, our activities have been limited to organizational matters, obtaining a
mining engineer's report and the preparation and filing of the registration
statement of which this prospectus is a part. In connection with the
organization of our company, the founding shareholder of our company contributed
an aggregate of $25,000 cash in exchange for 2,500,000 shares of common stock.
We have no significant assets, and we are totally dependent upon the successful
completion of this offering and receipt of the proceeds there from, of which
there is no assurance, for the ability to commence our proposed business
operations.
Proposed Business
On May 15, 2001, we acquired a 20 year mining lease from Kim
Drossulis, the owner of two un-patented lode mineral claims, sometimes referred
to as the "SP Project," located approximately 20 miles southeast of Reno, Nevada
and about 1.5 miles from Virginia City, Nevada. Mr. Drossulis was referred to
Tari by Trevor Isfeld, a business associate of Amy Chuang. Mr. Isfeld has been
involved in several gold mining ventures. An un-patented claim is one in which
more assessment work is necessary before all mineral rights can be claimed. We
are presently in the pre-exploration stage and there is no assurance that a
commercially viable precious mineral deposit exists in our property until
appropriate geological exploration is done and a final comprehensive evaluation
concludes that there is economic and legal feasibility to conduct mining
operations.
The exploration program proposed by Tari is designed to determine whether mining
operations would be economically feasible. It is uncertain at this time the
precise quantity of minerals in the property that would justify actual mining
2
operations. Some of the factors that would be used by to determine whether to
proceed with mining operations would be the data generated by our proposed
exploration program. This data will be evaluated to confirm that a mineral
deposit is sufficiently defined on three or more sides. Another factor would be
investigation into whether a buyer or a market exists for the minerals and the
prevailing market price for the minerals.
A lease for the claims was executed by us with Mr. Drossulis who is our
landlord. Under the terms of the lease, Tari may extend the initial term of 20
years for one additional period of 20 years provided that all conditions of the
lease have previously been met. Tari has the exclusive possession of the
property for mining purposes during the term of the lease. Under the terms of
the lease, Tari must pay an annual royalty as follows, of which the first
payment of $5,000 has already been made:
Anniversary Date Amount
- ---------------- ------
May 15, 2002 $10,000.00
May 15, 2003 $15,000.00
May 15, 2004 $20,000.00
May 15, 2005 $25,000.00
May 15, 2006 and thereafter $50,000.00
If Tari fails to meet the above lease payments, the lease may be terminated if
the landlord gives written notice of such default. After receipt of default,
Tari has 15 days to cure the default. In addition, the lease may be terminated
if Tari fails to make federal, state, and county maintenance payments or filing
fees at least 15 days prior to due date. In that event, the landlord must notify
Tari of a possible default. After 10 days, if the default is not cured the
landlord may initiate payment on the claims. Tari will be able to cure this
default by reimbursing all federal, state and county payments made by the
landlord plus a 20% penalty within 30 days.
Under applicable federal, state, and county laws and regulations, annual mining
claim maintenance or rental fees are required to be paid by Tari for the
un-patented mining claims which constitute all or part of the leased property,
beginning with the annual assessment work period of September 1, 2002 to
September 1, 2003. Tari must timely and properly pay the federal, state, and
county annual mining claim maintenance or rental fees, and must execute and
record or file, as applicable, proof of payment of the federal, state, and
county annual mining claim maintenance or rental fees and the landlord's
intention to hold the un-patented mining claims. If Tari does not terminate the
agreement before June 1 of any subsequent lease year, Tari will be obligated
either to pay the federal, state, and local annual mining claim maintenance or
rental fees for the property due that year or to reimburse the landlord.
Tari also has the right to buy out the landlord's interest in exchange for a
payment of $5,000,000 from which royalty payments made up to the time of the
buyout may be deducted. If a buyout occurs, Tari must also pay the landlord a
perpetual 4% royalty on all minerals recovered from the property.
The lease may be terminated at any time by Tari provided that we give written
notice 30 days prior to relinquishing the leased property. In the event Tari
desires to terminate the agreement after June 1 of any year, we are responsible
for all federal, state, and county maintenance and filing fees for the next
assessment year regarding the leased property. In addition, we must deliver to
the landlord in reproducible form all data generated or obtained for the leased
3
property, whether factual or interpretive. Finally, we must quitclaim to the
landlord all claims located or acquired by us.
Our business activities to date have been restricted to obtaining a report from
our mining engineer, Edward P. Jucevic, and preparing this offering. Mr.
Jucevic's report details the geological and mining history of the claims leased
by Tari, including the land status, climate, geology and mineralization. Mr.
Jucevic has not performed any actual exploration on the property for us.
Instead, Mr. Jucevic has reviewed the available literature on our claims and the
surrounding areas.
Mr. Jucevic has concluded that based upon previous exploration activity in the
area, sufficient evidence exists to warrant further exploration on the leased
property which could then lead to actual mining operations. Tari has leased two
"SP" un-patented lode mining claims, SP #1 and SP #2, comprising approximately
30 acres. These claims are recorded in the Storey County recorder's office and
with the United States Bureau of Land Management (BLM). The BLM serial numbers
are NMC # 823682, 823683 with title held by Mr. Kim Drossulis, our lessor. The
land on which the claims are located belongs to the United States Forest
Service. All requisite federal and state fees and filings have been paid and are
current.
The SP claims are located within a cluster of patented mining claims of third
party ownership. As part of our exploration program, Mr. Jucevic has recommended
that four neighboring patented claims be leased by us. We estimate the cost of
leasing these claims to be $5,000 each for one year for a total of $20,000.
The property leased by Tari covers lands credited with sporadic gold production
dating to the late 1850's. There is no recorded production and little published
information on our claims. In 1981, however, Houston International Mining
Corporation did investigate the ground covered by our claims. This investigation
revealed gold mineralization over a 25 foot interval at a depth of 45 to 70
feet. Mr. Jucevic believes this would justify a direct target for drilling. This
target area has never been followed up since the work performed in 1981. In
addition, Mr. Jucevic believes that other claims in the vicinity of our claims
have geologically significant features that trend in the direction of our claims
to an extent such as to justify further exploration. Consequently, he has
concluded that there is a reasonable potential that additional exploration and
drilling will outline important mineral reserves.
A two phase exploration and drilling program has been proposed. Phase 1,
including a recommendation to lease four neighboring patented claims and perform
drilling and assaying, with estimated costs of $89,000, followed by a Phase 2
with estimated costs of $82,000. The purpose of this offering is to finance the
implementation of Phase I. Phase 2 would involve more extensive drilling and
assaying. If commercially viable mineralization is found, of which there is no
assurance, we anticipate that development costs would range between $2,000,000
to $12,000,000, depending upon the type of mineralization, the rate of return,
the production rate, and the type of mining and ore processing that is utilized.
Mr. Jucivec is a mining engineer with offices at 1100 15th St., No. 95C, Sparks,
NV 89431. He graduated from the Colorado School of Mines with an Engineer of
Mines Degree in 1961, and graduated from the University of Nevada, Reno, Mackay
School of Mines with a Masters Degree in Metallurgical Engineering in 1970. He
is a Registered Professional Mining Engineer. Registration Number: 2995-Nevada:
Registration Number 13691-Arizona and licensed to work throughout the United
States. He has been practicing the profession since graduating from the Colorado
School of Mines. In addition, Mr. Jucivec is a member of the Society for Mining,
Metallurgy, and Exploration Engineers and the Geological Society of Nevada. Mr.
Jucivec has no direct or indirect interest in the SP property and will not be
4
given any an interest in Tari's mining claims or securities. Mr. Jucivec's
report, dated May 9, 2001, is based on his examination of published and
unpublished reports, maps, cross-sections, geochemical data and drill data.
Location and Access
The SP claims are located in Storey County, Nevada approximately 20 miles
southeast of Reno and 1.5 miles northeast of Virginia City, Nevada. Access can
be had to our claims from Reno, Nevada by following state Highway 341 to
Virginia City, then traveling approximately 1.75 miles east along Six Mile
Canyon Road to the Seven Mile Canyon dirt road. The claims lie approximately one
mile to the north on the eastern side of Seven Mile Canyon Road.
Claim Status
Tari has obtained a mining lease on two valid un-patented lode mining claims on
file with the United States Bureau of Land Management (BLM) records in Reno,
Nevada in the name of Kim Drussolis. The claims are filed with the BLM as
follows:
CLAIM NAME BLM SERIAL NUMBER
- ---------- -----------------
SP-1 NMC 823682
SP-2 NMC 823683
The leased property is comprised of approximately 30 acres. Rental fees assessed
by the BLM are $200.00 annually and intent to hold fees assessed by the State of
Nevada are $11.00. These fees have been paid through August 31, 2002. The
surrounding land is owned by the United States Forest Service and is open for
staking. Mr. Jucevic recommends that at least 3 additional patented claims be
leased owing to a cluster of claims within a probable mineralized area that
includes our claims.
Climate And Local Resources
The claims leased by Tari are located at elevations ranging from 5900 to 7950
feet in gently rolling hills covered with sagebrush and Pinion pines. The
climate is temperate with moderate snow cover from December to March.
Groundwater is plentiful. Power lines are located near the property. The closest
population center is Virginia City, Nevada, located about 1.5 miles to the
northeast.
Our Proposed Exploration Program
We must conduct exploration to determine what amount of minerals, if any, exist
on our leasehold, and if any minerals which are found can be economically
extracted and profitably processed. Our exploration program is designed to
economically explore and evaluate our claims.
We do not claim to have any minerals or reserves whatsoever at this time on any
of our claims. We intend to implement an exploration program and to proceed in
the following two phases:
Phase I will cost $89,000.00. Under Phase I, we intend to lease four patented
claims in the area in addition to our claims. Leasing these patented claims
consolidates the area of our claims in the event and allows for us to expand our
5
potential development beyond the boundaries of the claims currently leased by
us. In addition, fractional unclaimed land between the these patented claims and
our claims will be staked as the first step in the technical evaluation. Then,
the existing geological mapping base will be expanded along with rock and soil
sampling. Five drill holes are then proposed to test depth extensions of a 100
foot air track hole drilled in 1981. This would include one hole drilled as a
twin to the hole drilled in 1981 and the other four as 100' or 200' stepouts in
a star pattern around the center hole. Two additional holes are proposed based
on data generated from the geologic mapping and rock and soil sampling.
Work Program Recommended Cost
- ------------------------ ----
PHASE I
Lease four patented claims $20,000
Claim Staking 1,000.
Claim Filing Fees 1,000.
Geological Mapping + Map compilation 5,000.
Soil and Rock Sampling 2,000.
Bonding for Drill Program 5,000.
Drill Site Construction 3,000.
Drilling (reverse circulation; 7 holes , 500' ea. @ $10/ft) 35,000.
Assay Drill Samples (350 @ ~$12 ea) 4,000
Wages, Per Diem, Vehicle - Drill Geologist 8,000.
Reclamation 5,000.
--------
$89,000.
Upon completion of Phase I, we will determine whether to proceed to Phase II.
Justification for continuing into a Phase II program on our property is largely
dependent upon drill results from the seven proposed holes planned during Phase
1. Leasing adjacent patented claims is important, but failure to do so would not
stop the exploration program from continuing to Phase II. If one or more of the
proposed holes drilled in Phase I returns a find of mineralization similar in
grade and in thickness as previously discovered in the 1981 hole, a Phase 2
program would be considered. Gold assays of 0.012 ounces per ton would be
sufficient to justify proceeding to Phase II. This phase would consist of
drilling an additional 10 holes to a depth of 500 feet each and thereafter
collect and analyze assays. The cost of Phase II would be approximately $82,000.
Competitive Factors
The mineral industry is fragmented. We compete with other exploration companies
looking for a variety of mineral reserves. We may be one of the smallest
exploration companies in existence. Although we will be competing with other
exploration companies, there is no competition for the exploration or removal of
minerals from our property. Readily available markets exist in North America and
around the world for the sale of minerals. Therefore, we intend to develop
mining claims to the production point in which major mining production companies
would seriously consider pursuing the property as a valuable and significant
acquisition.
6
Regulations
We will secure all necessary permits for exploration and, if development is
warranted on the property, will file final plans of operation before we start
any mining operations. We anticipate no discharge of water into active stream,
creek, river, lake or any other body of water regulated by environmental law or
regulation. No endangered species will be disturbed. Restoration of the
disturbed land will be completed according to law. All holes, pits and shafts
will be sealed upon abandonment of the property. It is difficult to estimate the
cost of compliance with the environmental law since the full nature and extent
of our proposed activities cannot be determined until we start our operations
and know what that will involve from an environmental standpoint.
The initial drill program outlined in Phase I will be conducted on B.L.M. lands.
The BLM will require the submittal of a plan of operation which would be used as
the basis for the bonding requirement, water permit and reclamation program. The
reclamation program could include both surface reclamation and drill hole
plugging and abandonment. The amount of the bonding would be based upon an
estimate by the BLM related to the cost of reclamation if done by an independent
contractor. It is estimated the bonding requirement would be $5000.00. The water
permit and fee is included in the reclamation cost which is estimated to be
$1000.00.
We would be subjected to the B.L.M. rules and regulations governing exploration
on federal lands including a draft environmental impact statement or EIS, public
hearings and a final EIS. The final EIS would address county and state needs and
requirements and would cover issues and permit requirements concerning: air
quality, heritage resources (potentially valuable cultural artifacts that are
more than 50 years old such as cabins that may be located on the property),
geology, energy, noise, soils, surface and ground water, wetlands, use of
hazardous chemicals, vegetation, wildlife, recreation, land use, socioeconomic
impact, scenic resources, health and welfare, transportation and reclamation.
Bonding requirements for mining are developed from the final EIS.
We are in compliance with all laws and will continue to comply with the laws in
the future. We believe that compliance with the laws will not adversely affect
our business operations. Tari anticipates that it will be required to post bonds
in the event the expanded work programs involve extensive surface disturbance.
Employees
Initially, we intend to use the services of subcontractors for manual labor
exploration work on our properties. Tari will consider hiring technical
consultants as funds from this offering and additional offerings or revenues
from operations in the future permit. At present, our only employee is Ms.
Chuang.
Employees and Employment Agreements
At present, we have no employees, other than Ms. Chuang, our president and sole
director who has received no compensation for her services. Ms. Chuang does not
have an employment agreement with us. We presently do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit plans;
however, we may adopt plans in the future. There are presently no personal
benefits available to any employees.
DESCRIPTION OF PROPERTY
A lease for the claims was executed by us with Mr. Drossulis who is our
7
landlord. Under the terms of the lease, Tari may extend the initial term of 20
years for one additional period of 20 years provided that all conditions of the
lease have previously been met. Tari has the exclusive possession of the
property for mining purposes during the term of the lease.
Under the terms of the lease, Tari must pay an annual royalty as follows, of
which the first payment of $5,000 has already been made:
Anniversary Date Amount
- ---------------- ------
May 15, 2002 $10,000.00
May 15, 2003 $15,000.00
May 15, 2004 $20,000.00
May 15, 2005 $25,000.00
May 15, 2006 and thereafter $50,000.00
If Tari fails to meet the above lease payments, the lease may be terminated if
the landlord gives written notice of such default. After receipt of default,
Tari has 15 days to cure the default. In addition, the lease may be terminated
if Tari fails to make federal, state, and county maintenance payments or filing
fees at least 15 days prior to due date. In that event, the landlord must notify
Tari of a possible default. After 10 days, if the default is not cured the
landlord may initiate payment on the claims. Tari will be able to cure this
default by reimbursing all federal, state and county payments made by the
landlord plus a 20% penalty within 30 days.
Under applicable federal, state, and county laws and regulations, annual mining
claim maintenance or rental fees are required to be paid by Tari for the
un-patented mining claims which constitute all or part of the leased property,
beginning with the annual assessment work period of September 1, 2002 to
September 1, 2003. Tari must timely and properly pay the federal, state, and
county annual mining claim maintenance or rental fees, and must execute and
record or file, as applicable, proof of payment of the federal, state, and
county annual mining claim maintenance or rental fees and the landlord's
intention to hold the un-patented mining claims. If Tari does not terminate the
agreement before June 1 of any subsequent lease year, Tari will be obligated
either to pay the federal, state, and local annual mining claim maintenance or
rental fees for the property due that year or to reimburse the landlord.
Tari also has the right to buy out the landlord's interest in exchange for a
payment of $5,000,000 from which royalty payments made up to the time of the
buyout may be deducted. If a buyout occurs, Tari must also pay the landlord a
perpetual 4% royalty on all minerals recovered from the property.
The lease may be terminated at any time by Tari provided that we give written
notice 30 days prior to relinquishing the leased property. In the event Tari
desires to terminate the agreement after June 1 of any year, we are responsible
for all federal, state, and county maintenance and filing fees for the next
assessment year regarding the leased property. In addition, we must deliver to
the landlord in reproducible form all data generated or obtained for the leased
property, whether factual or interpretive. Finally, we must quitclaim to the
landlord all claims acquired by us.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
We are a start-up, pre-exploration stage company and have not yet generated or
realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that our auditors
believe there is doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin removing and selling minerals. Accordingly, we must raise cash from
sources other than the sale of minerals found on our property. Our only other
source for cash at this time is investments by others in our company. We must
raise cash to implement our project and stay in business.
To meet our need for cash we are attempting to raise money from this offering.
There is no assurance that we will be able to raise enough money through this
offering to stay in business. Whatever money we do raise will be applied first
to exploration and then to development, if development is warranted. If we do
not raise all of the money we need from this offering, we will have to find
alternative sources, like a second public offering, a private placement of
securities, or loans from our officers or others. At the present time, we have
not made any arrangements to raise additional cash, other than through this
offering. If we need additional cash and cannot raise it, we will either have to
suspend operations until we do raise the cash, or cease operations entirely.
We will be conducting research in connection with the exploration of our
property. We are not going to buy or sell any plant or significant equipment. We
do not expect a change in our number of employees.
Limited Operating History; Need for Additional Capital
There is no historical financial information about our company upon which to
base an evaluation of our performance. We are pre-exploration stage company and
have not generated any revenues from operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of our properties, and possible
cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct research and exploration of our
properties. We are seeking equity financing to provide for the capital required
to implement our research and exploration phases.
We have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
Results of Operations
From Inception on May 2, 2001
We just recently acquired our first interest in lode mineral claims. At this
time we have not yet commenced the research and/or pre-exploration stage of our
mining operations on that property. We have paid $5,000 for a mining lease. As
of December 31, 2002 we had incurred losses of $60,091.
9
Plan of Operations
Since inception, we have used our common stock to raise money for our property
acquisition, for corporate expenses and to repay outstanding indebtedness. Net
cash provided by financing activities from inception on May 2, 2001 to May 31,
2001 was $25,000 as a result of proceeds received from our president and sole
director. Our business activities to date have been restricted to obtaining a
mining engineer's report and preparing this offering.
Tari's plan of operations for the next twelve months is to undertake Phase I of
the drilling and exploration program. We can commence Phase I assuming at least
50% of the offering is sold. However, the total cost of Phase I is estimated to
be $89,000.00 and therefore can not be completed unless approximately 85% the
offering is sold. We have no plan to engage in any alternative business if Tari
ceases or suspends operations as a result of not having enough money to complete
any phase of the exploration program.
Phase I will involve leasing of neighboring patented claims at an estimated cost
of $20,000. Filing and claim staking fees are anticipated to be $2,000. We will
then initiate drilling for soil sample areas of potential interest including 7
holes 500 feet deep in the suspected areas that indicate the presence of ore.
Costs associated with this activity will include $5,000 for geological mapping,
$2,000 for soil and rock sampling, $5,000 for bonding the drilling program,
$3,000 for drill site construction, $35,000 for drilling, $4,000 for assaying
drill samples, $8,000 for a geologist and $5,000 for reclamation. The total cost
of Phase I is estimated to be $89,000 and will take approximately two months to
complete.
Upon completion of Phase I, we will determine whether to proceed to Phase II.
The discovery of mineralization during the Phase I program consistent with
discoveries made on our claims in 1981 will be sufficient justification to
proceed to Phase II. Phase II is designed to further identify areas of
mineralization on our claims. In addition, we will may make investigations into
whether a buyer or a market exists for our mineral products and analyze whether
the minerals can be extracted by us for a profit.
This offering will only be adequate to finance Phase I. Assuming we decide to
proceed with Phase II, we will be required to obtain additional financing. Phase
II will consist of more extensive drilling of 10 holes averaging 500 fee deep to
determine the extent, depth and dip of ore discovered in Phase I. We anticipate
incurring costs of $3,000 for drill site construction, $50,000 for drilling,
$12,000 for assays, $12,000 for a geologist and $5,000 for reclamation in Phase
II. It is anticipated that Phase II will cost approximately $82,000 and take
approximately two months to complete.
Liquidity and Capital Resources
As of the date of this registration statement, we have yet to generate any
revenues from our business operations. Since our inception, Ms. Chuang has paid
$25,000 in cash in exchange for 5,000,000 shares of common stock. This money has
been utilized for organizational and start-up costs and as operating capital. As
of December 31, 2002 we had sustained operating losses of $60,091.
We will be required to sell at least 50% of this offering before commencing
Phase I of our planned exploration program. In addition, unless approximately
85% of the offering is sold, we will not be able to complete Phase I. Assuming
sufficient funds are raised in this offering to complete Phase I, we will be
able evaluate within the next 12 months whether to proceed with Phase II. Should
we decide to proceed with Phase II, we will be required to raise an additional
$89,000.00.
According to the terms or our mining lease, we are obligated by May 15, 2002 to
pay a minimum royalty of $10,000. We will be required to renegotiate the terms
of the mineral lease in the event we are unable to raise sufficient funds in
time to meet this obligation.
10
ITEM 3. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, the Company carried out an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within the 90 days prior to the filing date
of this report. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer and Company's Chief Financial Officer. Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There have been no significant changes in the Company's internal controls or in
other factors, which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which we (or any of our officers
and directors in their capacities as such) is a party or to which our property
is subject and no such material proceedings is known by our management to be
contemplated.
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits - 99.1
(b) Reports on Form 8-K - NONE
SIGNATURE
In accordance with the requirements of the Securities and Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BREAM VENTURES, INC.
Dated: April 15, 2003
/s/ THEODORE TSAGKARIS
THEODORE TSAGKARIS
Chief Executive Officer
12
13
CERTIFICATIONS*
I, THEODORE TSAGKARIS, certify that;
1. I have reviewed this quarterly report on Form10-QSB of Tari, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other facts that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
14
Date: April 15, 2003
/s/ THEODORE TSAGKARIS
THEODORE TSAGKARIS
Chief Executive Officer
*Provide a separate certification for each principal executive officer and
principal financial officer of the registrant. See Rules 13a-14 and 15d-14. The
required certification must be in the exact form set forth above.
15
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, THEODORE TSAGKARIS, Chief Executive Officer and Chief Financial Officer,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-QSB of
Tari, Inc. for the quarterly period ended June 30, 2002 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Quarterly Report
on Form 10-QSB fairly presents in all material respects the financial condition
and results of operations of Bream Ventures, Inc.
By:
/s/THEODORE TSAGKARIS
THEODORE TSAGKARIS
Chief Executive Officer &
Chief Financial Officer
Date: April 15, 2003
16
TARI INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
June 30, 2002 and March 31, 2002
(Stated in US Dollars)
(Unaudited)
ASSETS
June 30, March 31
2002 2002
---- ----
Current
Cash $ 1,035 $ -
LIABILITIES
Current
Bank indebtedness $ - $ 39
Accounts payable and accrued liabilities 13,912 12,827
Due to shareholders 4,655 1,830
18,567 14,696
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value
100,000,000 shares authorized
2,500,000 shares issued 2,500 2,500
Additional paid-in capital 22,500 22,500
Deficit accumulated during the pre-exploration stage ( 42,532) ( 39,696)
( 17,532) ( 14,696)
$ 1,035 $ -
17
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three months ended June 30, 2002, for the
period May 2, 2001 to June 30, 2001 and for the
period May 2, 2001 (Date of Incorporation) to
June 30, 2002
(Stated in US Dollars)
(Unaudited)
May 2, 2001
Three months May 2, 2001 (Date of Incor-
ended to -poration) to
June 30, 2002 June 30, 2001 June 30, 2002
------------- ------------- -------------
Expenses
Audit and accounting fees $ 1,000 $ - $ 7,533
Bank charges 75 53 269
Consulting fees - - 5,000
Incorporation costs - 900 900
Legal fees - - 21,601
Office expenses - - 268
Resource property - Note 3 1,556 5,000 6,756
Transfer agent and filing fees 205 - 205
Net loss for the period $ ( 2,836) $ ( 5,953) $ ( 42,532)
Net loss per share $ ( 0.01) $ ( 0.02)
Weighted average number of shares outstanding 2,500,000 267,123
18
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three months ended June 30, 2002, for the
period May 2, 2001 to June 30, 2001 and for the
period May 2, 2001 (Date of Incorporation) to June
30, 2002 and 2001
(Stated in US Dollars)
(Unaudited)
May 2, 2001
Three months May 2, 2001 (Date of Incor-
ended to poration) to
June 30, 2002 June 30, 2001 June 30, 2002
------------- ------------- -------------
Cash Flows from Operating Activities
Net loss for the period $ ( 2,836) $ ( 5,953) $ ( 52,532)
Change in non-cash working capital items
related to operations:
Prepaid expenses - ( 11,000) -
Accounts payable and accrued liabilities 1,085 - 23,912
( 1,751) ( 16,953) ( 28,620)
Cash Flows provided by Financing Activities
Due to shareholders 2,825 - 4,655
Proceeds from shares issued - 25,000 25,000
2,825 25,000 29,655
Increase in cash during the period 1,074 8,047 1,035
Cash (bank indebtedness), beginning of the period ( 39) - -
Cash, end of the period $ 1,035 $ 8,047 $ 1,035
Supplementary disclosure of cash flow information Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
19
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF STOCKHOLDERS'
DEFICIENCY for the period May 2, 2001 (Date of
Incorporation) to June 30, 2002
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Additional During the
Common Shares Paid-in Pre-exploration
-----------------------------------
Number Par Value Capital Stage Total
Capital stock issued for cash
- at $0.01 2,500,000 $ 2,500 $ 22,500 $ - $ 25,000
Net loss for the period ended
March 31, 2002 - - - ( 39,696) ( 39,696)
Balance, March 31, 2002 2,500,000 2,500 22,500 ( 39,696) ( 14,696)
Net loss for the period ended June
30, 2002 - - - ( 2,836) ( 2,836)
Balance, June 30, 2002 2,500,000 $ 2,500 $ 22,500 $ ( 42,532) $ ( 17,532)
20
TARI INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS for the period May 2, 2001 (Date of
Incorporation) to June 30, 2002
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
While information presented in the accompanying interim financial
statements is unaudited, it includes all adjustments which are, in
the opinion of management, necessary to present fairly the
financial position, results of operations and cash flows for the
interim period presented. All adjustments are of a normal
recurring nature. It is suggested that these interim financial
statements be read in conjunction with the Company's March 31,
2002 financial statements.
Note 2 Continuance of Operations
The financial statements have been prepared using generally
accepted accounting principles in the United States of America
applicable for a going concern which assumes that the Company will
realize its assets and discharge its liabilities in the ordinary
course of business. As at June 30, 2002, the Company has a working
capital deficiency of $17,532, which is not sufficient to meet its
planned business objective or to fund mineral property
expenditures and ongoing operations for the next fiscal year. The
Company has accumulated losses of $42,532 since its commencement.
Its ability to continue as a going concern is dependent upon the
ability of the Company to obtain the necessary financing to meet
its obligations and pay its liabilities arising from normal
business operations when they come due.
Note 3 Commitments
a) Mining Lease
By a lease agreement effective May 15, 2001 and amended on
April 5, 2002, the Company was granted the exclusive right to
explore and mine the SF resource property located in Storey
County of the State of Nevada. The term of this lease is for
20 years, renewable for an additional 20 years so long as the
conditions of the lease are met. Minimum payments and
performance commitments are as follows:
21
Note 3 Commitments - (cont'd)
-----------
a) Mining Lease - (cont'd)
Minimum Advance Royalty Payments:
The owner shall be paid a royalty of 4% of the net smelter
returns from all production. In respect to this royalty,
the company is required to pay minimum advance royalty
payments of the following:
- - $5,000 upon execution (paid)
- - $1,250 on or before May 15, 2002 (paid)
- - $8,750 on or before November 15, 2002
- - $15,000 on May 15, 2003
- - $20,000 on May 15, 2004
- - $25,000 on May 15, 2005
- - $50,000 on May 15, 2006 and thereafter
The Company can reduce the net smelter return royalty to
0.5% by payment of a buy-out price of $5,000,000. Advance
royalty payments made to the date of the buy-out will be
applied to reduce the buy-out price.
Performance Commitment:
In the event that the Company terminates the lease after
June 1, of any year it is required to pay all federal and
state mining claim maintenance fees for the nest assessment
year. The Company is required to perform reclamation work
in the property as required by federal state and local law
for disturbances resulting from the Company's activities on
the property.
b) Initial Public Offering
The Company has filed a SB-2 registration statement, which
includes an initial public offering of 2,500,000 common shares
at $0.05 per share. This offering is subject to regulatory
approval.
22